Has This Recession Seen It's Shadow?

With all due respect to Punxsutawney Phil, that lovable, furry creature charged with predicting the longevity of our winters, it's hard to predict beyond a shadow (pun intended) of a doubt whether seeing this recession's shadow means six weeks, six months or six more years of this mess.  Of course, when Phil is wrong, no one will demand that he live above ground or perform community service.  Not one iota of the vitriol that would be directed at, say, Treasury Secretary Geithner if his forecasts went awry.  Plus, Phil never forgot to pay his income taxes.

There are signs of an early spring in this recession.  While the stock market has been on a bit of a roll, the credit markets, where this whole mess began, is showing signs of a spring awakening:

• Companies with good credit are borrowing more in the bond market.
• Confidence in the banking industry (especially community banks and credit unions) seems to be returning slowly.
• Junk bonds are coming back into vogue (yields are about 16.5 percentage points more than Treasuries, a large premium for risk).
• The market for securities made from bundles of car loans and student loans, a vital source of credit, has started to stabilize.
• Home buyers are seeing some benefits of the credit thaw as interest rates on fixed, 30-year mortgages fell to the lowest levels on record.

I can't see my shadow, can this be over?

 Wait a minute, like they say about the weather in Vermont, if you don't like this economy, wait five minutes.

• Credit markets are still fragile.  Ratings agencies are slashing the credit scores of such bellwether companies as General Electric.
• General Motors bondholders are bracing for a possible bankruptcy filing.
• If unemployment continues to race higher, or the stimulus package fails to take root and the economy enters a deeper period of decline, many of the tentative gains in credit could come undone, analysts say.
• With the idled capacity in the U.S.--workers, factories, retail outlets, freight lines, bank lending--many economists feel that even if the recession miraculously ended tomorrow, it would take at least three years before full employment returned and output rose enough for the economy to operate at peak levels.

Uh-oh, I think I see my shadow.

It is abundantly clear that it is virtually impossible to predict with any degree of certainty what will happen in the stock or credit markets next week.  Forget about predicting next quarter or the quarter after that.  What is clear is that community banks and credit unions need to forget about looking for their shadow and take advantage of the unique opportunity to grow market share as the negative effects of safety and soundness continue to plague the larger financial institutions.

A recent survey of 755 community banks across the U.S. showed that 55% of those banks had dramatically increased deposits, and 40% had increased loan volume since the beginning of the year.  Is your bank or credit union one of them?  Are you still waiting for that definitive answer of when this mess will end so you can then go back to some form of banking normalcy?

No one correctly predicted the breadth and depth of this economic cataclysm.  And if you're waiting for someone to tell you when it's over, you might as well borrow Phil for a few days.  The banks and credit unions that are acting now to make a positive impact with customers, prospects and their communities will be the true winners before, during and after the economic turnaround happens.

The Chips are Down --- Time to Cash Out or Go All In?

Greetings:

Okay, here is a challenge for you experienced marketers. I think you might be able to relate to this one.

I have a company that specializes in a niche industry. This target industry in turn is facing some of the most difficult challenges it has seen in decades. Competition is fierce, failures are everywhere, regulators and the news media are shining a spotlight on everyone and meanwhile, my clients are struggling with the day to day challenges of operating in a highly unfavorable environment.

So, with my target market at risk, what do I as a leader need to do to ensure my own company’s survival?

Well, I have a few options, I guess:

1. Hunker down and try to just hang on until it blows over
2. Get out while I can and expand into a different customer base that is not my specialty
3. Go all in and commit to do everything possible to help my clients succeed and save myself at the same time.
   

Option 3 -- that’s where I am.

After twenty years in the bank marketing business, I stand firmly with you in this mess and believe we can pull through it together and come out stronger.

So, instead of hunkering down, MarketMatch has made a move to strengthen its offerings and bring our clients the resources to succeed in these trying times. We took advantage of the disruption in the marketplace and invested in growing our business and positioning ourselves for the future by acquiring a regional competitor. The acquisition brings MarketMatch new products and adds key executives to our team with significant experience. For more details, read the announcement. (link to release)

Now, here is the parallel for your business. Your markets are disrupted. You and your competitors are struggling to operate in an unfavorable environment. Who will come through the challenges better off – those that hunker down and wait for things to blow over? Or, will those who take proactive action to better position themselves and their clients for the future come out ahead in the end? Obviously, I advocate the proactive approach.

I challenge you to ask “Are we doing everything we can to take advantage of the disruption in our market? “

Clients are concerned and many are moving or considering moving their money. The trust in bank/customer relationships is being eroded every day by the news media’s sensationalist headlines. Are you taking proactive steps to a) secure your current relationships and b) capitalize on your competitors’ weaknesses?

Comment and tell me what you are doing to proactively move your organization forward in this marketplace. Or, let me know if you need help identifying actions you can take to better position your bank for success.

Cheers,

Bruce Clapp

Who is Your "Uncle Dave?"

“'I might have to make a visit to Uncle Dave,' which is what people in Ouray say when they need to take a loan from the local bank, Citizen’s State, whose chairman is named David Wood.”

This is an excerpt from Twilight of a Mountain God, an article about Rick Trujillo - who said the quote - in the January, 2009 Runner’s World magazine.

Trujillo is part mountain goat … his trail running accomplishments, tenacity, endurance and downright stubbornness made me say, “Wow.”  Then I got to this quote and said ... well, let’s just say it was more than “wow.”

Sure, the city of Ouray, Colorado has fewer than 1,000 residents – but any community bank or credit union in ANY city can have an “Uncle Dave.”  It can be your chairman, president, or branch manager.  Even in a metropolitan area, a community institution can have the "Uncle Dave" of the neighborhood surrounding the branch.

Essentially, Uncle Dave is the community’s go-to-guy when it comes to banking.

Think of the power of having an Uncle Dave … especially in this economy with money transferring and trust wavering. 

My goal for 2009 is to begin to create at least one Uncle Dave (this type of rep won’t come overnight). 

You just need to:

• Have the right Uncle Dave – someone who can represent the bank or credit union well and “own the role.”
  
• Be the first to market – it won’t do to be the second Uncle Dave in the market
  
• Be consistent – Uncle Dave is a THE community banker
  

If you have an “Uncle Dave,” please share some thoughts about it in this blog.

Have a very merry Christmas and happy holidays.

Take care,

Eric